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Start with focusing on these 5 important factors.

Naomi Blohm, senior market adviser

January 2, 2020

5 Min Read
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If there is anything that 2019 has taught us, it is to be prepared for those important grain marketing opportunities when they occur. Using the benefit of “hindsight 20/20”, focus on these 5 important factors to be best prepared for capturing marketing opportunities and managing risk in 2020!

1. Pay attention to seasonals

Looking specifically at corn and soybean futures, grain prices have a strong tendency to trade higher in the early winter months. The pricing peak is then often softened in late February once the market has traded any poor crop weather in South America and once trade starts to anticipate the potential crop that the American farmer will be planting in the spring. Many times then during the months of March through May, prices then slide sharply lower until a summer weather rally occurs. It is in the early winter when some of your better marketing opportunities for the year may occur. Be ready to reward the market with cash sales.

2. Follow the money

Following the trade activity of the “commercials” and the “funds” is a must. Fortunately both groups submit their daily trade activity to the CFTC (Commodity Futures Trading Commission). With this data, a report is released on Friday afternoons which shows the amount of positions bought or sold during the week. The reason this is important is because it shows when the funds are long (buyers) or short (sellers) in the market, and we can compare that to historical circumstances. We can then use this as a gauge to contend when the market price may be near the bottom of a price trading range, or near the top of a price trading range.

3. Look at the charts

Make time to look at daily charts of futures prices, as well as weekly and monthly charts. Is the market price trending higher, lower, or sideways? Know where important price support levels hold, as well as were overhead resistance price points are. This is important because as prices near resistance levels on charts, you then need to ask yourself if all of the bullish news has been priced in, and might this be the price top? Or what types of fundamental factors might make the market rally further? And if an upside rally is truly potential, how high could the next price move go? You can then use this to have targets for those important cash sales.

4. Pay attention to supply and demand

Look at the monthly reports from the USDA to gauge demand and overall supply. Look at global supplies and global demand. Pay attention to ending stocks. Is the perception that supplies are getting smaller or larger? Often times it is that perception (and not the reality) that moves the market, and provides those marketing opportunities. The January 10th report will likely be filled with new tidbits of information; will we see smaller harvested acres and smaller yield? Look to see if corn use for ethanol or feed use has an increase in demand. Will corn demand for exports get smaller? Will ending stocks for wheat get smaller due to increased export and feed demand? In order for a price rally, the ending stocks number needs to get smaller.

5. Follow outside markets and the value of the dollar.

Specifically, keep an eye on crude oil. Global economic trends seem to be improving, which might spur more demand for crude oil. Also watch the value of the U.S. Dollar. The dollar has been trending lower, and if this can continue, it would be of benefit to U.S. commodities. A lower U.S. dollar makes it cheaper for other countries to import our products due to the currency exchange rate. This would help increase demand for corn, soybeans, wheat and other important U.S. agricultural products.

Marketing is how you get paid for your hard work. Make time weekly to monitor the important twists and turns that affect the price of grain you work so hard to produce. Be ready with your marketing plan. Have your price targets for sales set with your elevator. Those marketing opportunities will arrive quickly, and can turn on a dime.

Reach Naomi Blohm: 800-334-9779 and [email protected]

Disclaimer: The data contained herein is believed to be drawn from reliable sources but cannot be guaranteed. Individuals acting on this information are responsible for their own actions. Commodity trading may not be suitable for all recipients of this report. Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. No representation is being made that scenario planning, strategy or discipline will guarantee success or profits. Any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to Total Farm Marketing. Total Farm Marketing and TFM refer to Stewart-Peterson Group Inc., Stewart-Peterson Inc., and SP Risk Services LLC. Stewart-Peterson Group Inc. is registered with the Commodity Futures Trading Commission (CFTC) as an introducing broker and is a member of National Futures Association. SP Risk Services, LLC is an insurance agency and an equal opportunity provider. Stewart-Peterson Inc. is a publishing company. A customer may have relationships with all three companies. SP Risk Services LLC and Stewart-Peterson Inc. are wholly owned by Stewart-Peterson Group Inc. unless otherwise noted, services referenced are services of Stewart-Peterson Group Inc. Presented for solicitation

About the Author(s)

Naomi Blohm

senior market adviser, Total Farm Marketing by Stewart Peterson

Naomi specializes at helping farmers understand how to manage cash marketing needs and understand the importance of managing basis, delivery point considerations, cash flow needs and storage capacity. She earned her Bachelor of Arts in Political Science with a minor in Agriculture Business at the University of Wisconsin in Platteville. She has a Master of Science in Adult Education with an emphasis in Ag Economics from the UW-Platteville and a Master Certificate in Global Education, from the UW-Oshkosh.

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